Menlo Ventures has officially joined the cap table of AI coding startup Factory. Partner Matt Murphy confirmed the investment in a recent blog post, noting that the deal is part of the startup's latest funding round. While the specific financial terms remain undisclosed, the company was valued at $5 billion during its last round announced in September 2026.
The investment follows a public conflict involving Factory CEO Matan Grinberg and board advisor Chris Degnan. Grinberg alleged that he fired Degnan due to concerns regarding the potential sharing of confidential information with competitor Cognition. Degnan, who recently joined Cognition as chief revenue officer, disputed these claims, stating that he resigned from his position at Factory.
The situation escalated when Vinod Khosla, an investor in both Factory and Cognition, publicly criticized Factory, labeling it a struggling competitor and questioning the integrity of its CEO. Menlo Ventures, which does not hold a stake in Cognition, issued a statement supporting Factory's leadership and technology, effectively distancing itself from Khosla's assessment.
Industry observers are drawing parallels between this deal and Matt Murphy's previous investment in Anthropic. Following the announcement, other backers, including Sequoia's Shaun Maguire, expressed support for the move. Menlo Ventures indicated that it would have increased its investment size if additional space had been available on the company's cap table.
